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Ohio CUs commit 150M to private student lending
COLUMBUS, Ohio (5/7/10)--A collaboration of Ohio credit unions has stepped forward to commit $150 million in affordable student lending to college-bound Ohioans in response to the rapidly increasing gap between federal student loans and the cost of higher education.
Click to view larger image Ohio Credit Union League President Paul Mercer (right) presents a check from Ohio credit unions to Ohio college students for $150 million. Lori Jablonski, a mother of two college students from Toledo, and Miami University students Robert Hendricks and Chris McMillan accept the check. (Photo provided by the Ohio Credit Union League)
Ohio Student Choice is an alliance of 11 Ohio credit unions that each committed at least 1% of their assets to student lending. The alliance was officially introduced Thursday at the Ohio Statehouse before state leaders, credit union supporters, parents and college students. The combined fields of membership of the participating credit unions encompass the entire state, said the Ohio Credit Union League. “If you are familiar with the credit union movement, then you know collaboration is something we do very well,” said league President Paul Mercer during a news conference at the Ohio Statehouse. “The lack of private student lending in the market is forcing Ohio’s future leaders to delay or even vacate their goal of earning a college degree. As lending institutions with capital on hand, credit unions cannot sit idly by.” In 2010, the average college student will receive $7,800 in federal loans while attending a public institution, according to the College Board. However, the average cost of tuition is $15,200, leaving students a gap of $7,400 to fill. For private institutions, that gap jumps to more than $35,000. The result is a funding gap increase of 57% for public institutions and 42% for private institutions since 2002. Adding to the problem is the demand for loans and the lack of private lending in the marketplace. The total combined amount lent to college-bound students in the U.S. in 2009 was $112 billion. In 2012, that is expected to rise to $135 billion. With banks scaling back their lending due to financial and regulatory pressures, the supply of loans will not equal the demand, said the league. “With many lenders pulling out of the secondary market, credit unions started asking themselves, ‘Where are these students going to turn,’” said Sharon Custer, CEO of BMI FCU, Dublin. Ohio Student Choice loans will feature competitive interest rates, zero origination fees, flexible repayment options--including deferment while in school--the ability to secure financing during students’ entire undergraduate career, and electronic loan delivery and disbursement. CU Student Choice, a credit union service organization based in Washington D.C., will assist the Ohio credit unions with loan processing. However, students interested in the loans should apply directly at one of the participating credit unions. Participating credit unions include BMI FCU, Cinco Family Financial Center CU, Cincinnati; Directions CU, Sylvania; Day Air CU, Kettering; Kemba CU, Cincinnati; Kemba Financial CU, Gahanna; Seven Seventeen CU, Warren; Ohio Educational CU, Cleveland; MidState Educators CU, Columbus; Midwest Community CU, Defiance; and Wright-Patt CU, Fairborn.
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